Tata Steel: Sajid Javid to visit Port Talbot steelworkers

Image caption
Mr Javid is under pressure over his handling of the crisis

Business Secretary Sajid Javid is to meet Port Talbot steelworkers to insist the government is “on their side”.

Thousands of jobs could go after Tata Steel said it was selling its UK assets, including its Wales plant.

The European Steel Association said the UK had been blocking an EU measure which would have tackled the “dumping” of cheap Chinese steel in Europe.

But Chancellor George Osborne said the UK was “leading the way” in Europe in trying to help the industry compete.

“Both at home, where we are cutting taxes on energy and internationally, where we are working with others to make sure there are tariffs on unfairly cheap steel, you have got a government doing everything it can to help the steel industry,” he said.

Ministers have argued against the European Commission proposal to lift the “lesser duty rule” cap, which would allow tougher tariffs to be imposed on cheap imported steel.

Ministers argue that higher tariffs would hit other sectors such as the car industry.

After a board meeting at its headquarters in Mumbai on Wednesday, Tata confirmed plans to sell its loss-making UK plants. Unless a buyer can be found, thousands of jobs are at risk.

The Port Talbot plant – which employs 4,100 people – is said to be losing £1m a day.

Dumping, duties and steel

Image copyrightPA

The EU is imposing financial penalties on 16 categories of Chinese steel imports which they believe are being “dumped” on overseas markets – effectively being sold at a loss.

The rate of these duties varies but, controversially, they are more often than not lower than the actual amount by which the products are under-priced.

This is in, large part, down to the so-called “lesser duty” rule.

This rule, which derives from World Trade Organisation regulations, states that it is desirable, although not necessary, for tariffs to be applied at a level “adequate” to remove the financial harm caused to competitors but “at a level lower than the margin of dumping”.

UK steel producers and unions argue the EU, by adhering to this rule, has effectively capped steel tariffs at 9% although the European Commission does not recognise this figure.

Critics say tariffs are far higher in the US and totally ineffective when heavily-subsidised Chinese steel is sold at 66% of cost price.

The UK has argued against higher tariffs, saying they would hit other sectors such as the car industry, which import a lot of foreign steel.

But the European Commission is considering removing the rule from relevant legislation, a move reportedly backed by France and Germany.

Mr Javid, who has returned to the UK after cutting short an official trip to Australia, has been criticised for his absence during the crisis, and for taking his daughter on the trip.

He will meet workers and managers at the plant, along with members of the Welsh Government and trade unions.

Ahead of the meeting, Mr Javid tweeted that he had also held “productive” talks with the local Labour MP Stephen Kinnock and Welsh Secretary Alun Cairns about the way forward.

Both Mr Javid and the prime minister have said nationalisation is “not the answer” for British steelworks but union and opposition figures have criticised the government for failing to do enough to respond to the issue.

‘Industrial crisis’

Unite general secretary Len McCluskey said the UK was in the grip of an “industrial crisis of enormous proportions”.

He called for the creation of a steel taskforce and for the government to intervene to save the steel industry like it did the banks during the financial crisis, saying EU state aid rules had not prevented Italy or France from “protecting” their steel industries.

Shadow chancellor John McDonnell said the government “should nationalise to stabilise”, saying this would involve covering the plant’s costs in the short term to help a new buyer turn it around.

Charles De Lusignan, from the European Steel Association, told BBC Radio 4’s Today programme that the UK had been blocking a European Commission proposal from 2013 to remove restrictions on higher tariffs.

Image copyrightPA

Image caption
More than 4,000 people are employed at the Port Talbot Tata steelworks, which is now under threat of closure

“The fact that the UK continues to block it means that when the government says it is doing everything it takes to save the steel industry in the UK but also in Europe it’s not,” he said.

“European Steel and UK steel is viable so there is no fundamental reason why it shouldn’t go on for the foreseeable future.

“But action should have been taken already. We find ourselves discussing a problem which should never have arisen and would not have arisen had we modernised trade defence instruments when we had the chance.”

Media captionDavid Cameron has held talks with key ministers to discuss the steel crisis

Meanwhile, some have raised concerns about Mr Javid’s trip with his daughter.

Labour MP Anna Turley said it gave the impression of the trip “being a jolly”, while fellow MP Stephen Kinnock, whose Aberavon constituency is home to the Port Talbot plant, said Mr Javid should have travelled to Mumbai for Tata’s crunch board meeting on Tuesday “but instead he chose to jet off to Australia”.

A source from the Department for Business, Innovation and Skills said Mr Javid’s daughter “was there to spend time with her father” and “he paid for everything” – and dismissed Mr Kinnock’s calls for him to consider his position as “ridiculous”.

David Cameron has said ministers had been working “for months” to save the industry – but warned there were “no guarantees of success”.

Steel production makes up 1% of Britain’s manufacturing output and 0.1% of the country’s economic output.

It is understood the government is looking at offering loan guarantees to potential buyers and tighter rules on procurement to make sure major British projects are obliged to buy British steel.

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